Digital Growth vs. Environmental Stewardship, Part_2

The world is going digital. Although universal access to the internet remains a challenge, the uneven expansion of the internet and high-speed transmission has advanced access to digital government services and industry financial services in several regions across the world. Cloud computing is on the rise with a compound annual growth rate of 16.4%. The growing number of sensors with the Internet of Things is aiding data generation. At the same time, the capabilities of data processing with AI are advancing at unprecedented speed, while the advent of quantum computing promises to augment this trend. Furthermore, the virtual world is becoming increasingly intertwined with our everyday lives, thanks to advancements in virtual and augmented reality technologies.
Yet, virtual reality has not left its material roots. According to UNCTAD’s Digital Economy Report, producing a single two-kilogram laptop requires a staggering 800 kilograms of raw materials.

The linkage between digitalization and the environment remains complex. The lifecycle of digital technologies can be broadly separated into the phases of production, use, and disposal. The local context across all three phases plays a determining role in surmounting ecological challenges. Last week’s blog highlighted the tensions between local availability of natural resources like water and energy and the uneven expansion of digitalization during the use phase. This week, we focus on the global disparities in shouldering the environmental consequences of the production and disposal phases. The rapid integration of digital technologies in the economy is exerting increasing pressure on natural resources. The underdeveloped capabilities to recycle electronic waste is adding to environmental strains. The combination of aspirations for digital benefits, its unevenly distributed ecological costs, and skewed international trade dynamics is perpetuating global socioeconomic inequalities.

The concentration of the adverse impacts of production in adjacent communities and ecosystems disproportionately burdens developing nations. Over the past 60 years, the elements from the periodic table included in the production of a phone has risen from 10 to 61. Many minerals and rare metals are highly concentrated in regions of the world. Three of the largest reserves of transition materials can be found on the continent of Africa; in South Africa, Guinea, and the Democratic Republic of Congo. ‘Transition minerals’ circumscribes several critical metallic components of digital technologies and energy transition technologies. The extraction of raw materials often threatens both human rights and environmental ecosystems. Mining activities are emissions-, energy-, and water-intensive, polluting the water, impacting local ecosystems and biodiversity, and accelerating deforestation. Simultaneously, extracting minerals often threaten workers’ health and safety with poor labor conditions, impose on indigenous lands, involve child labor, and spark violent conflicts. The accelerating demand for digital technologies will exacerbate the environmental and social risks. According to the UNCTAD Report, global exploration budgets for transition minerals rose 16% in 2022, following a 34% increase in 2021. Yet, the benefits of the technologies do not return to the communities responsible for the production phase.

International trade dynamics reinforce digital and ecological disparities across the supply and value chain of digital technologies. The system of “unequal ecological exchange” works as follows:

• The low value-add raw materials are extracted in developing countries and exported.
• Middle-income countries handle the processing and manufacturing.
• The final phase of production and the sale of the products occurs in developed economies.

Although resource rich, developing countries benefit from the sale of the raw materials, their value is significantly diminished compared to the final product. Despite their critical and environmentally costly role in production, developing countries are often condemned to buy back the finished digital products from developed countries for a higher price than their profit from raw material sales. By contrast, developed economies do not bear the brunt of the ecological impacts, while benefiting from domestic development and international sale of finished products. Beyond the system of “unequal ecological exchange”, developing economies hamper their ability to climb up the value chain due to:

• Exporters failing to grow their domestic economic activities because multinational enterprises that invest in the country will establish and control mining activities.
• The local development of mining activities exposing the domestic economy to external demand conditions and shocks in the transition mineral market.
• An emerging vulnerability stems from the shift in domestic agendasfrom countries such as the US, China, and the EU. Traditionally considered major importers, now these countries aim to construct domestic supply chains to reduce their reliance on global partners. The consequent diminished international demand will put the economies dependent on the export of raw materials at risk of being left out of the digital supply chain. 
• Finally, inefficiencies in the transport modularity of the supply chain wreaks further ecological havoc by relying on an emissions-intensive network of shipping the components of digital technologies across the globe for different stages of production.

The disposal of waste related to digital technologies heightens the disparity in digital technology adoption and ecological burden. According to the Digital Economy Report, digitalization-related waste grows with increasing consumption, declining prices, and limited public awareness. Linear models of production and “fast tech” exacerbates the trend. Linear models of production refer to products being bought, used, and discarded with limited opportunities to repair, reuse, or recycle it. Fast tech alludes to the shrinking lifespan of technology products. Shifting the digital economy away from the principles of “reduce, reuse and recycle” can diminish the need to develop robust waste management systems to protect public health and the environment from hazardous substances contained in these products. Moreover, the industry’s drive to remain at the forefront of innovation necessitates the continuous adoption of new technologies and hardware. Even initiatives to promote sustainability, such as improving energy-efficiency, can require the regular replacement of hardware.

The environmental burden of e-waste disposal deepens existing global socioeconomic discrepancies. According to the Digital Economy Report, developed countries generate 3.5 times more waste per capita compared to developing countries. However, a significant portion of the waste is transported back to developing countries for treatment and disposal, despite the often-lacking local capacity in formal collection and recycling systems. As a result, informal waste disposal systems fill the gaps, leading to the insufficient recovery of valuable materials and the unsafe treatment and disposal of toxic components. The inefficiencies of reusing valuable materials limit the ability of local communities to benefit from the disposal and perpetuates the increasing demand for new raw materials. Furthermore, it creates dangerous working conditions and practices for locals, while contaminating the soil, water, food, and air in the region. Consequently, communities of developing countries face the adverse social and ecological impacts of e-waste disposal from their own digital economies and the digital technologies deployed in developed nations.

The challenges of digital waste require a holistic solution across the technology lifecycle. Between 2010 and 2022, digital waste grew three times faster than the ability to collect e-waste. According to the Digital Economy Report, hurdles to implement improved disposal systems include the complexity of devices, the economic viability, the lacking legislative frameworks, the limited collection and treatment infrastructure, and the lack of worker training and consumer awareness. The circular economy provides a possible solution. The circular economy, as opposed to linear models of production, internalizes principles of reduce, reuse, and recycle across the development, use, and disposal lifecycle. By designing products to lengthen lifespans, remove barriers for repairs, and facilitate the recycling of hardware components, a circular economy can diminish the strain on natural resources and e-waste disposal. However, calculations estimate that only 7.2% of the current global economy is circular.

Digital growth is accelerating but its costs and benefits are shared unevenly across the globe. Developing countries must climb up the value chain in digital technologies production to claim more benefits and protect their digital economies from volatility and reliance on geopolitical dynamics. The circular economy can help reduce the strains of production on natural resources and local communities, while introducing greater economic gain from recycling and recovery systems. The circular lifecycle of technologies can alleviate the disproportionate burden on developing countries without inhibiting their digital development. The UNCTAD Digital Economy Report excels in delivering crucial ideas and insights, empowering policymakers and businesses worldwide to drive sustainable and inclusive digital growth.